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Student videos

Explaining the Liquidity Trap

  • Levels: AS, A Level, IB
  • Exam boards: AQA, Edexcel, OCR, IB, Eduqas, WJEC

The liquidity trap is a useful concept to use when evaluating the effectiveness of changes in monetary policy in achieving macroeconomic objectives. In this revision video we look at what a liquidity trap is, what can cause it and consider four ways in which macroeconomic policy might attempt to overcome a liquidity trap.

Explaining the Liquidity Trap

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